The theoretical analysis of stationary state and tracing characteristics of UPQC based on the compensation strategy presented by Akagi.H is given in the paper. It is demonstrated by digital simulation that the theoretical analysis results are correct and the UPQC based on the compensation control strategy can cause high frequency resonance. In order to erase the resonance, the improvement for the compensation strategy which is that coupling point voltage detection and supply current detection are simultaneously employed by shunt active power filter is proposed. The theoretical analysis and simulation result demonstrate that the compensation control strategy can improve the high frequency resonance.